Types of Business Structures
Last updated: April 2023
Please note that this guidance is general in nature and does not constitute legal, tax or any other type of professional advice. If you are unsure about your business structure we suggest that you consult with a professional.
Due to regulatory requirements, we request certain information about your business structure when you open a Square account, and the information requested can vary depending on the type of business you operate. The guide below will walk you through the type of information we’ll be looking for to help you get started with Square.
Business Structure
Individual/Sole Proprietorship
A sole proprietorship is an unincorporated business owned exclusively by one person. In a sole proprietorship, the business owner is the business – the owner does not have a separate legal status from the business. If you’re running a small business on your own, you may choose to establish your business as a sole proprietorship.
Being a sole proprietor doesn’t prevent you from hiring other people
As a sole proprietor, you pay personal income tax on the net income generated by your business
You can operate and bill your customers in your own name, or operate under a registered business name and bill your customers or clients in the business’ name. Note: if you’re using a business name, you may need to file a DBA (Doing Business As) to open a separate bank account with that business’ name.
While becoming a sole proprietorship can be a low-cost option, it won’t protect your personal assets: you are responsible for all company payments, debts and expenses.
Learn more about sole proprietorship on the Government of Canada website.
Partnership
A partnership is established between two or more individuals, corporations, trusts or partnerships (tiered partnership) to do business. There are two types of partnerships: general and limited. In a general partnership, partners share profits and losses and are jointly liable. A limited partnership can have both general and limited partners.
Most partnerships are governed by a written agreement defining the partnership rules (scope of operations, division of income, etc.).